If a retailer is considering changing employees’ bonus schemes, how should it implement the changes to their terms and conditions?

Multichannel retailers are increasingly looking at ways to incentivise their employees to promote their products across all channels. One way is to make changes to employees’ bonus and/or commission schemes and create an environment that encourages employees to embrace the multichannel mindset.

If the bonus scheme is contractual, this will entail making changes to the employees’ terms and conditions of employment. The best way of doing this, advises Vanessa Bell, employment solicitor in Thomas Eggar LLP’s retail team, is to consult with employees. 

However, says Bell: “If some employees do not freely provide their consent to the changes, the retailer effectively has two options. One is to just go ahead and impose the change to the scheme terms and the other is to terminate the employee’s employment on notice and offer employment on the new terms.”

Imposing the changes is not recommended as the employees would be free to work under protest, or alternatively, resign and claim constructive dismissal. The better route is to dismiss and re-engage the employees on the new terms. To avoid claims for unfair dismissal, the retailer must show it has acted reasonably. This includes demonstrating there was a sound business reason for dismissing the employees, that the retailer consulted with its employees and that the overall procedure followed was fair.